A reason for broker optimism

by
Vernon Clement Jones |
09 Aug 2013

There's yet more indication demand for homes isn't about to hit the skids, with housing starts trending at 187,416 units in July -- down only a hair from June.

"The trend in total housing starts continued to be relatively stable in July, remaining within a narrow range (since) March 2013," said Mathieu Laberge, deputy chief economist at CMHC. "For the past few months, total housing starts have followed the stabilizing trend observed in sales of existing homes earlier this year."

Stability aside, the growing number of new homes expected to hit the market in the next 24 months -- primarily condos and townhomes -- will likely help to keep prices in line with buyer expectations. That should accrue to brokers in the form of a brisk resale market and the mortgages that go with it.

Analysts, in fact, suggest that most markets will continue to favour buyers and effectively spur fence-sitters into action. That's likely more good news for brokers.

Still, an anemic economy could keep demand in check along with tighter limits imposed by CMHC on lender access to guarantees for mortgage securities.

On Tuesday the Crown corp. announced it will now limit each lender enrolled in its mortgage-backed securities program to $350 million in guarantees for August.

CMHC says it will impose the limit for each lender on new guarantees in an effort to stay below its $85-billion ceiling. Brokers, among other channel players, are concerned the move will see lenders increase their mortgage rates to compensate for any increase in their own securitization costs or an associated drop in business.